Here's True Religion's Post-Bankruptcy Plan
True Religion has a plan to reduce debt from $471 million to $113.5 million as it emerges from Chapter 11 bankruptcy four months after filing.
The California-based denim retailer's plan of reorganization was approved by the Delaware bankruptcy court on Oct. 5, 2017.
True Religion’s re-organization plan allows the denim company to greatly de-leverage its balance sheet, reducing its term loans from $471 million to $113.5 million upon emergence and extending its debt maturities to 2022. Debt Service each year will be substantially reduced, clearing the way for continued investment and company growth.
“We would like to thank our consumers, our employees, vendors and suppliers for their unwavering support and continued dedication to the True Religion brand,” says John Ermatinger, CEO. “With substantial debt burden removed, we are eager to turn our full attention to implementing our forward-thinking strategy, including improving our retail operations, new partnerships and growing the brand’s digital presence.” Ermatinger added, “With the consummation of this restructure, we are very excited and poised for the future.”
True Religion’s emergence from bankruptcy allows it to compete effectively with a sustainable debt structure, adequate operating liquidity and structural improvements from financial and operational restructuring. The company continues to make progress against its strategic plan, with adjusted EBITDA through September at $13.6 million, or +46 percent to last year.
Citizens Bank, which provided $60 million in DIP financing, is also providing the exit ABL of $60 million, ensuring that True Religion continues to have ample additional liquidity, in addition to its cash flow from operations and substantially reduced debt service obligation, to execute its growth plan.